Decentralized Future: Exploring the World of Smart Contracts
Everytime the term “DeFI” is mentioned, we are always in tune back to the quote made by the Co — Founder of Coinbase which said “Everything will be tokenized and connected by a blockchain one day”. This quote has been true throughout the years as DeFI which started from just Digital Assets to now encompass many different Decentralized Platforms available for its millions of users. So Can everything really be Tokenized? And What is its potential in establishing a Decentralized Future?
The Invention of Smart Contracts…
The Story of every DeFI Space and Blockchain Technology might always be referenced to Bitcoin, afterall it is the breakthrough invention in the 2010s with its unlimited potential shine bright as the decade go by. More Digital Assets aim to be the next Bitcoin as its growth measured in X times instead of Percentage tempts a lot of innovators to revolutionize the original concept laid out by Bitcoin and its whitepaper in 2008.
While many have tried and failed spectacularly throughout the years like the story of Onecoin, some actually did breakthroughs like Bitcoin Cash and Litecoin. But the title for the revolutionary breakthrough might have to go to “Ethereum” which introduced us to the potential of Smart Contracts in its whitepaper released in 2014. This immediately launched Ethereum to its popularity in 2015 and became the framework for the DeFI Space as we know today.
The Ethereum Virtual Machine or EVM for short expanded on the original blockchain network laid out by Bitcoin by introducing the feature to tokenize a piece of data or code and creating digital copy that is stored within the network. Essentially a smart contract is a self-executing program that automates the actions required in a blockchain transaction and once completed, these actions are then trackable within the blockchain but irreversible.
The best way to envision smart contracts is to visit the nearest ATM Machine, you insert your card to the machine and choose the withdrawals/ transfer amount you want to make, the Machine will then automatically execute the program to deduct the balance from your account and dispense the cash for withdrawals. In this case every Digital Assets within the DeFI Space are produced from the smart contracts functionality though to varying degrees.
The Primary benefit of any Smart Contract function is the same with the whole blockchain technology which is to enable a decentralized network of platforms that is interconnected with each other without the use of third parties. Smart Contracts are efficient in tackling in its execution while also immutable to human changes once it’s deployed which makes it easy to adopt into many sectors that store data digitally within our daily lives.
And in this vast growing world of Smart Contracts, EVM still maintains its dominance with more than 60% of DApps and other DeFI platforms across the DeFI Spsce being powered by this virtual machine. EVM functions as a colossal database, storing Ethereum blockchain accounts and balances while also operating as a machine state, capable of executing machine code and adapting to changes in the blockchain ledger. This versatility finds its shape in the ERC-20 or ERC-721 Tokens which provide smart contracts for many different iterations within the Blockchain.
The success of EVM throughout the 2010s prompted a sea of competitors that are willing to challenge its dominance, amongst those are the Binance Smart Chain or more often referred to as BNB Blockchain. The success of Binance as the world’s no 1 exchange prompted a requirement for more scalability and the Virtual Machine was created in 2019. It aims to provide solutions for better quality Decentralized Platforms within the space while providing cheaper transaction fees at a time when Gas Fees in EVM was sky high.
Both are essentially leaders within the smart contract space that is expected to reach $15.5 billion by 2030, rising at a market growth of 50% CAGR during the predicted period. While North Americe are usually the forefront for many technologies, the rise in Smart Contracts adoption has been spearheaded by the Asia — Pacific region with countries like South Korea, Japan and Singapore rolling out regulations to eagerly embrace it.
The most popular adoption still revolves around the Digital Asset space, especially the concept of Stablecoins as many countries line up to create their own national currency within the Blockchain. The success of USD Tether being the 3rd largest Digital Currency by Market Cap proves how integral it is within the Blockchain space and many iterations such as the EURT or GBPT come up to offer ease of conversion within many exchanges.
Application of Smart Contract also continues to grow beyond the DeFI Space with many Banking and Tech space institutions aiming to integrate the concept within their system. While many nations also aim to develop their own CBDC that would grow the blockchain space even further and reignite the hope of having a decentralized future upon us. Its possibilities are pretty much endless while its adoption must be encouraged so the innovation keeps going.
How far might its Potential be?
The concept of everything being integrated in the blockchain has been true for a few years and its future might be brighter than always. A key component to establish a digital decentralized future is the Blockchain and Smart contract which should continue to be adopted for its impact to encompass many different sections of our daily lives. Blockchain and Smart Contracts also so far have proved to be an efficient and reliable system for many different activities to be integrated upon.
What stumped the DeFI Space has been the wrong adoption that the concept was based on from the creation of memecoins to fancy JPEGs within 2021 and beyond. The concept of Tokenizations and NFTs can be used to integrate many different documents and assets to the Blockchain so its security can be preserved while ease of transfer might lead to exposure to many communities such as RWAs Tokenization which have helped many different commodities receive its light to the public.
The concept can also be for the Legal and Finance sector where integral documents can be tokenized and stored for safe — keeping while retrievable at the time of need. This would provide transparency for all the stakeholders involved within the industry while ensuring that its legitimacy is upheld within the network. These adoptions will obviously need clear regulations to be enforced by regulators for adoption to grow within many different sectors and the compliance can be put in check.
All in all, the Smart Contract has been the building blocks upon which a growing DeFI Space continues to expand on and prove the test of time. Blockchain technology has its rivals in Artificial Intelligence but the two are an integral part in creating a seamless digital and decentralized future for the world we live in. With an endless possibility of smart contracts, the future might be integrated to the blockchain network after all but its adoption should be done in the right and innovative way.
We from the Nagaya Technologies Pte. Ltd are proud to be amongst the pioneers within the Tokenization of Real World Asset space. The award-winning concept behind the “Nagaya Method” was developed in 2018 as we understand the need to realize the potential of Blockchain technology with the support of Real World Matured Asset in order to provide sustainability over the long run. Nagaya becoming the World’s First Hybrid Digital Asset continues our commitment to expand real-life adoption of Blockchain Technology. Intrigued to know more about Nagaya, you can visit us at www.nagaya.co
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